Section 327 of the Proceeds of Crime Act 2002 created the offence of money laundering in relation to criminal property. The money laundering activities prohibited by section 327(1) of the 2002 Act comprised (a) concealing criminal property, (b) disguising criminal property, (c) converting criminal property, (d) transferring criminal property and (e) removing criminal property from England and Wales. It was inherent in the concept of money laundering by transfer, disguise or conversion, that criminal property would often be moved into a financial system and mixed with other money within it. This allowed it to be absorbed into the economy and enjoyed by criminals, without it being capable of being traced to the original crime. Money laundering often involved a complex web of transactions. The money laundering operation was designed by criminals to provide a benefit which was different from and additional to that which was gained from the underlying crime. The additional benefit lay in the money laundering operation itself, because the criminal hoped, thereby, to be able to enjoy the fruits of the underlying crime, without detection. The separate offence of money laundering was thus widely drawn in section 327 and covered activity which extended to something which represented, in part and indirectly, the criminal property obtained from the underlying crime (paras 20–22).

The criminality of the money laundering offence had to be gauged, in the first instance, by the nature and scale of that activity, not by the nature and scale of the underlying crime. It was the money laundering activity which was a separate criminality from the underlying crime which fell to be sentenced. In money laundering, it was the whole amount involved, not merely that part which comprised criminal property, which impacted on the system. The financial system was damaged if it was used for money laundering and the damage had to be measured by the sums which were employed in that harmful activity. The scale of the harm was measured by the scale of the funds, which included criminal proceeds or “dirty money”, not by the amount of dirty money itself . Money laundering offences could be committed by those who were unaware of both the nature and the scale of the underlying criminal activity. It followed that, in sentencing for money laundering offences, the court might not know what crime gave rise to the proceeds which were being laundered, nor how much those criminal proceeds were before becoming mixed in the money laundering operation. When sentencing for money laundering offences, it was necessary to focus on the scale of the money laundering activity itself (paras 23–24).

This approach was reflected in the Sentencing Council Guideline, which provided tables categorising harm, by reference to the scale of the money laundering activity, not the underlying offence which provided the criminal proceeds which were being laundered. On p 36 of the Guideline, harm was to be identified by reference to two boxes, Harm A and Harm B. Harm A provided that harm was initially assessed by the value of the money laundered and listed six categories by reference to monetary amounts. Harm B provided that, to complete the assessment of harm, the court should take into account the level of harm associated with the underlying offence, to determine whether it warranted upward adjustment of the starting point within the range, or outside the range. Where it was possible to identify the underlying offence, regard should be had to the relevant sentencing levels for that offence (paras 25–26).

The guidance distinguished between (1) the money laundering amount; and (2) the harm caused by the underlying offence. The wording of Harm B recognised that the second might be something which the court could not identify. The table at p 37 of the Guideline was set out by reference to the six categories of harm determined by applying the Harm A criteria. They were based on the amount of the money laundering activity, not the amount of the criminal proceeds being laundered (para 27).